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By Jeff Harding. Check out this report on the Obama Administration’s latest gift: free golf cart! This is from the Wall Street Journal. I really can’t add much to this. We thought cash for clunkers was the ultimate waste of taxpayer money, but as usual we were too optimistic. Thanks to the federal tax [...] Rebel Economist video on The People’s Stimulus A new video from “Rebeleconomist” (Michelle Muccio). She poses the question: who’s better at spending your money, you or the government? Enjoy. Why the Fed and Treasury Can’t Renegotiate Securitized Subprime Loans Brent and Whitney bought a condo in Corona, California in 2005 for which they paid $275,000. They put down the $25,000 they borrowed from their parents and signed up for a $250,000 mortgage. It was an adjustable rate loan which reset in 2008. I don’t have to explain the rest. They bought at the top of the market, home prices cratered, the condo is now worth $160,000, and they are way upside down. Whitney lost her job at a mortgage brokerage and they haven’t paid the mortgage for the last two months. They were paying about $1,650 a month (PITI) and have been told the new payment will be about $1,800 a month. Whitney calls the company where she sends the check every month and is told they only collect cash and that she would have to discuss it with the service company H.Q. in L.A. She calls the service company. A week later they call back and tell her there’s nothing they can do about it because the loan owned by several entities in a complex arrangement and that they have no authority to renegotiate. Whitney swears at the snitty phone rep and decides to move out. Rents down the street for a similar condo that was foreclosed and resold are only about $1,100 a month. Since she and Brent live in California, they have no personal liability on the loan. They move out and send the keys to the service company. A major part of President Obama’s plan to revive the economy is to renegotiate mortgages and make them less costly for homeowners. Also he wants to protect homeowners from foreclosures. According to the Wall Street Journal mortgage service companies are being hit by a Tsunami of foreclosures. This is the case despite the fact that Freddie and Fannie have declared a moratorium on foreclosures for their loans. … Continue reading Why We Shouldn’t Help Brent and Whitney Watch Out for the Do Something Congress I’ve been watching TV reporters interview out of work people around the country. They are all good and worthy people not looking for a handout who deserve to have good jobs and financial well being. Almost to a person they are looking forward to the success of Obama’s stimulus bill. I talk to a lot of small businesses and many are hurting right now. They all believe–or hope–that the economy will start to rebound later this year. In fact many are banking on this fact, so to speak.  Warren G. Harding President 1921-1923 Almost everyone in the media who discuss the crisis thinks some kind of fiscal stimulus is needed. Arguments about how and what are the only difference between the Republicans and Democrats. Something has to be done is the usual response. I’m a dissenter. I think the proposed bill will actually harm the economy and make things worse. Of course I’m not the only one saying this. The problem with talking about this is that you have to get down into economic theory to convince people of your argument and most people aren’t interesting in economic theory. “Just do something!” Most people now accept as “common sense” that the government has to do something. They argue that since spending has contracted, all we need to do is have the government spend huge amounts of money, distribute the goodness throughout the economy, and this new wealth will “prime” the economic pump and “kick start” the economy. … Continue reading What Would Warren G. Harding Do? |
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